It's a general stat buff for the enemies. You really should crank up the game on hardest difficulty and see what actually happens.
Greys become like super-snipers, with amazing view range and accuracy. I've had my entire team massacred on turn one just trying to get out of the plane to get cover, and they never even got a glimpse of what was shooting at them.
Another time, there were a couple of greys in the bridge of a small downed alien sub, they had corners to hide behind, basically massacred my whole team trying to get a line of fire on them. To take out even low-level grunts who have 2+ guys in a control room, you'd probably need grenades on hardest difficulty, direct fire weapons are no good because they have amazing reflexes and never miss.
Also, Lobstermen. Goddamn lobstermen on hardest level. My entire team opened up with heavy explosive grenades against a single lobsterman, as well as trying torpedoes, rocket launchers, demolition charges. You name it, if it existed, I loaded the whole team up to try it. It was like a gag scene in a battle anime. Each time there was an unholy pile of explosion and debris, everything terrain-wise blown to bits. But then, next rounds starts and I hear "squick-squick-squick" as the Lobsterman is moving around. In the end, I discovered the only way to stop lobstermen AT ALL on hardest difficulty was stun weapons, so i had to (at the start) give my guys stun batons and try and sneak up on a lobsterman who has a plasma rifle. Perhaps some of the end-game explosives can hurt a lobsterman, but nothing you get near the start can.
So you can take out bases (which are full of lobstermen usually), but you'd need to 100% equip stun weapons, which would really require you to mass produce those stun grenade launchers, but the problem is that you need the alien materials you get from bases to make those ...
So it's not just the gear, hardest difficulty on XCOM II causes you to have to play completely differently to how you'd play on XCOM I or the same game on basic difficulty.